Digital Transformation for SMEs – The ultimate guide


Whether driven by need or desirability, SMEs are enthusiastic about taking advantage of the newly emerged connectivity and communication landscape.  Therefore, it isn’t surprising to see an increasing number of SMEs are either planning or have already undertaken activities for digital transformation.

In this guide, we explain:

Digital transformation for SMEs – What you need to know

Meetings and transactions traditionally conducted face-to-face, or physically instore, have given way to Zoom and WhatsApp meetings and E-Commerce and online banking.

Furthermore, these digital enhancements have permeated other aspects of business too, such as remote working, communication and collaboration.

These enhancements have facilitated the growth of the digital economy and strengthened globalisation, with a business’ resources extending far beyond the boundaries of a traditional ‘bricks and mortar’ environment.

46% of companies investing in digital technologies have seen an increase in their annual turnover

Source: Publications Office of the EU

Small and medium businesses realise that customers’ expectations are changing and that there is a growing demand for information, services and products to be available at all times.

However, it’s not just customers who are driving small and medium organisations to undertake digital transformation. There are monetary benefits too, such as maximising value from existing assets, lowering operational costs and optimising service provision, and generating growth.

The cumulative potential outcome is “a level playing field” for SMEs.  Small and medium businesses acknowledge that digital transformation allows them to compete with the more established companies in their market.

Driven by the demands and advantages of connectivity and communication, SMEs are ensuring that their business is ready for digital growth.  By adopting digital tactics, SMEs can, not only drive down their operational costs and increase competitivity but also widen their market share.

As a small or medium business, digitally transforming your organisation on a limited budget may be daunting. This guide aims to address some of the concerns and will highlight how SMEs can implement and benefit from digital transformation.

What is digital transformation, and why is it important for SMEs?

Digital Transformation (DX) harnesses and gains from technology, using digital technologies to bring value and increase productivity, by streamlining business activities and functions.

Ultimately, to achieve digital transformation, SMEs will need to look at all aspects of their business.  A comprehensive review of their company may involve the creation or augmentation of their existing business processes, practices, workflows and procedures.

8% of companies investing in digital technologies have seen a decrease in their operational costs

Source: Publications Office of the EU

Organisations undertake digital transformation to better position their businesses for long-term growth.  There may be multiple drivers for this, such as the desire to remain competitive by decreasing overheads, increasing revenue or improving productivity.

An opportunity for SMEs

Digital transformation will involve looking at and reviewing multiple facets of your organisation to identify the opportunities for improvement.  Such an undertaking may include, for example, looking at IT operations to leverage cloud technologies.  Or evaluating sales, marketing and financial processes, to integrate between multiple systems across these business functions.

Modifying and enhancing your organisation’s processes with digital technologies will help SMEs automate redundant, repetitive, and error-prone activities and tasks.  Overall, this will enable improved decision making with better efficiency.

As a result, SMEs can deliver enhanced customer experiences, drive loyalty, and even attract new business.

With this opportunity in mind, it’s of no surprise that smaller firms are more likely to adopt digital technologies than larger firms.  Nearly 75% of small firms (less than 10 employees) claimed they had deployed at least one digital technology for business purposes. At the same time, this share decreases for larger firms.

Digital Transformation – key drivers for improved business performance

An essential element of digital transformation is technology. However, more often than not, it’s about eliminating dated processes and legacy technology.

According to SMB Group, the top drivers for digital transformation for small and medium enterprises are:

  • Small businesses — attracting new customers
  • Medium businesses — staying competitive
  • Upper midmarket — improving employee productivity

AppDirect’s 2019 Digital Economy Report, further supports this, identifying growth as the primary driver for digital transformation (45%), followed closely by staying competitive (38%) and operational efficiency (38%).

Source: AppDirect Digital Economy Report, Jan 2019


The trend for these drivers have remained reasonably consistent over the last few years.  PWC’s Global IQ survey 2017 yielded similar results, identifying increased profits (47%) and reduced costs(40%) as primary drivers.

Digital transformation benefits for small and medium businesses

For SMEs, the advantages of leveraging emerging technology are attractive. By going digital, SMEs can compete against more established organisations.

Highlighted below are some of the core benefits that digital transformation brings for small and medium organisations:

Increased savings and efficiencies

Digital transformation simplifies and consolidates routine processes and operations for customer and technical support, product design, logistics, and others, streamlining and expediting tasks, thereby boosting productivity and significantly saving time and costs.

Leveraging technologies such as Artificial intelligence (AI), Automation and Machine Learning, organisations can understand customers and anticipate their behaviour. Such technologies enable SMEs to capture, manage, and measure customer interactions with their businesses providing the capability for more accurate lead scoring and sales forecasting.

59% of SMEs have already started building an AI strategy

Source: Microsoft/KPMG – The Future of the Medium Sized Business: 7 Trends Driving SMEs’ Digital Transformation

Improved customer experience

SMEs can address pain points experienced by the customer while interacting with their organisation. By improving customer experience through digital transformation, SMEs can collect and analyse critical customer information through tools such as data analytics, feedback collection, marketing automation.

Small and medium organisations can use such information and data to improve omnichannel offerings, deliver personalised services and provide new channels for interaction by using chatbots, self-service, and customer relationship management.

Increase competitiveness, agility & innovation

Thanks to cloud-based solutions, the distinctive traditional divide between established businesses and small companies, SMEs can compete with larger enterprises.

The cloud catalyses small and medium enterprises to achieve scalability. It allows SMEs to compete and grow while retaining the flexibility and efficiency of a startup and offering quality services at scale.

Traditionally, small and medium organisations struggled with significant barriers to entry.  Whether insufficient funds, inability to scale quickly, and generally lagged with technology.  The emergence of cloud solutions enables SMEs to remain competitive, agile, innovative at a fraction of the historical costs.

85% of all cloud-based app investments are by SMEs

Source: Microsoft/KPMG – The Future of the Medium Sized Business: 7 Trends Driving SMEs’ Digital Transformation

Data-driven insights

SME owners understand that decisions should be based on analytical data.

In a rapidly changing digital landscape, data one of the most valuable assets for SMEs. Intelligent use of the accumulated data allows SMEs to improve strategic and business decision-making and to position themselves for growth.

Many analytics tools allow businesses to track and analyse website performance, evaluate marketing campaigns, and establish the success of their content in real-time.  Thereby helping businesses make informed decisions to deliver user-focused customised products and services.

Big data and business analytics (BDA) permits the collection of accurate market and customer intelligence. Making informed decisions using data-driven insights enables SMEs to assess existing customer insights and adjust their offerings and service accordingly.

What does digital transformation look like for SMEs?

Every business is unique, and therefore each business will need to develop a digital transformation roadmap tailored to its business and specific needs.

However, digital transformation can be in a myriad of forms, from adding instant messaging or chatbot functionality to your website to enhance your digital content management strategy.  Consequently, it is more than likely that SMEs have already undertaken an element of business transformation.

Based on the EU’s Digital Transformation Scoreboard 2018, identifies social media, mobile services, big data and analytics and cloud technologies (SaaS, PaaS and IaaS) as the most commonly adopted digital technologies.  Over the coming years, technologies such as IoT and 5G are expected to augment this.


The wide range of technologies demonstrates that if businesses want to develop with the rapidly evolving pace of digital change, they must work to increase efficiency with technology wherever possible.

While each business will have its own tailored business transformation roadmap, critical points to aid implementation need to be taken into consideration.  These can serve as useful guidelines when selecting the technologies to enable business transformation.


Getting the fundamentals right

A starting point to digital transformation would be to ensure you have business-grade broadband. A superior broadband connection will allow SMEs to attain speeds of up to 330Mbps.

Learn more about choosing the best internet broadband service for your business

There are many considerations to make when it comes to digital transformation. Improved broadband speed and bandwidth should be high on your list. Telecommunications should also be a high priority be for preparation.

The higher speeds and reliability offered by business broadband will be crucial, particularly if you have large files to download and backup.  Furthermore, business broadband is a must if as part of your business transformation, you are planning on leveraging cloud technology for video conferencing, applications or telephony.


Integrating systems & technology

While addressing digital transformation needs, many SMEs make the common mistake of implementing multiple disparate systems.  Such an approach can often lead to complex systems which utilise numerous formats, inputs and outputs.  As a result, collaboration, upgrades and maintenance can become challenging, and could cost more in the long run in terms of both cost and efficiencies.

SMEs should consider implementing a seamless digital strategy.  To achieve a more digital approach, SMEs should identify technology solutions that integrate well with existing IT systems.  Look for comprehensive solutions which offer extensive capabilities, are scalable, and easily customisable to ensure futureproofing and alignment with your growth plans.

Another aspect to consider is consistency.  Identifying common platforms and applications for your users will enable you to standardise processes and formats for seamless information flow.

Because of this, SMEs will find their communications improved, and their workflows enhanced with digital capabilities.


Leveraging cloud technologies

Using the cloud for your digital transformation is a great way to make sure that your users are familiar with new technology while also reducing your costs.

Some common digital transformations using cloud technologies are:

  • cloud telephony
  • back up and storage
  • applications such as email and core and productivity business apps, for example, Google’s G Suite.

Read also: Digital Transformation – Guidance for your cloud migration


Improving web analytics

For SMEs, the internet brings enormous benefits.  As the internet has matured, consumers habits have changed, and shopping has become more omnichannel than ever. As a result, a plethora of software and platforms have become available.  Google Analytics, social media, newsletters, can be seen as extensions of your online business, and provide you with accurate and dynamic performance data.

For instance, SMEs can track a customers journey using website analytics. You can identify where customers have come from, which website categories they are trying to navigate to, and how much time they are spending on your site.  Website analytics allow SMEs to finetune their online presence to encourage users to register with them for goods or services.


Data is key

When utilised correctly, data can be one of the most powerful tools for small and medium organisations to harness.  Once you become savvy with it, data can lead to more precise business decisions and tailored campaigns.

To derive this benefit from your digital transformation initiative, SMEs should aim to unify and analyse data in a centralised system and make it useful and actionable.  Unification of data into a centralised system will enable SMEs to create consistently, enhanced, and customised experiences to improve customer service.

SMEs should, therefore, focus on:

  • Digitally enhancing data workflows to improve the management of data
  • Leverage APIs to enable intersystem communication and bring together disparate streams of data
  • Identify and utilise behavioural, transactional, and operational data across multiple channels and devices to drive decisions and tailor communications.

Digital transformation provides you with robust data and improves accessibility, creativity, efficiency, profitability and competitiveness.

86% of respondents who have adopted big data and data analytics consider digital technologies to have generated positive outcomes.

Source: EU – Digital Transformation Scoreboard 2018

How can SMEs start the digital transformation of their organisations?

Small and medium businesses widely recognise the opportunities offered by digital transformation.  However, even though ‘going digital’ can be crucial for a business’ success, most SMEs are unclear how to get started.

Also learn about the 7 essential steps SMEs must take to create a successful digital transformation strategy

Each organisation will have different challenges and hence will need to tailor their digital transformation strategy accordingly.  So, how can a small and medium business get started with digital transformation?

1.     Prioritise your business goals

Prioritise your business goals. The positive impacts of digital transformation could be experienced across your organisation. Ultimately, strengthening your bottom line and gearing your organisation for growth.

Instead of moving everything at once – for example, migrating all your applications, data, and services to the cloud. SMEs should aim to document and address specific issues that require urgent attention.

Try to segment your business into specific areas.  Options range from front-end transformation such as products and customer experiences to back-end transformation such as cloud and IT infrastructure.

2. Identify how your business will go digital

A digital orientated approach will make sure that changes are implemented in a planned and controlled manner, ensuring sure that your employees and customers are not overwhelmed.

Furthermore, a phased approach, as outlined, will allow SMEs to track, measure and manage changes, thereby minimising any impact on their business’s functionality and budget.

3. Prepare your staff for digital transformation

Communicating the value of digital transformation to staff will allow SMEs to obtain intrinsic buy-in and streamline the adoption of new platforms.

Communicating your plan and vision for digital transformation clearly and concisely to your employees is just as essential as coming up with the strategy.

Everyone should have an opportunity to express their concerns, raise queries and understand the undertaking. For larger organisations, making sure you gain executive buy-in early on during the initiative will make more likely for users and employees to embrace change.

Digital transformation best practices

Organisations can sometimes make the mistake of equating digital transformation with updating technology.

Must read: Digital Transformation – 5 mistakes businesses must avoid

Digital transformation means adapting not only new technologies, but also ensuring your organisation is prepared for any shifts in customer expectations, dynamic social trends, and industry disruptions.

Digital transformation, when correctly done, can lead to efficient workflows—thereby allowing small and medium businesses to respond to these changes.  As a consequence, SMEs will become more customer-focused, innovative, agile, adaptive, and efficient to remain competitive.

Here you will find essential digital transformation best practices for SMEs should employ:


Recognise and understand the problem you are aiming to solve

Once you have identified your business goals, and have prioritised list of issues that require urgent attention. Take some time time to consider how digital transformation can address the problem and benefit your business.

Once you have focused on one issue and identified a potential solution, think in broader terms. Can the same solution address further issues?

For example, finding solutions for remote working, such as cloud-based video conferencing increases collaboration and communications, and moving files to the cloud again also improves collaboration and facilitates remote working.

You may find that multiple issues could be addressed with a single solution, bringing in significant cost savings.


Focus on customer experience

Customer experiences fuel digital transformation.  It’s important you focus your energies on your customers with the knowledge, data and information available to your organisation.

For instance, visitors to your website, expect content to be relevant to what they’re doing any given time, anywhere and available on the device of their choosing. It will be their journey that influences your strategy.

An example of this may be helping your customers via a wide range of channels for support.  One of the first strategies you should look at is the customer service ecosystem, which now includes social media, reviews sites, forums, and communities.

Only 8% of buyers are content with customer experience

Source: Microsoft/KPMG – The Future of the Medium Sized Business: 7 Trends Driving SMEs’ Digital Transformation

Stakeholder communication and collaboration

One digital transformation best practice SMEs need to incorporate is collaboration and communication with all stakeholders.

Transparent communication and engagement with stakeholders will help them embrace changes and allow you to gain buy-in.  These include vital decision-makers, users, partners (systems integrators and suppliers), and customers.

Further steps include:

  • Showcase the value of your digital transformation initiative by focusing on the features your organisation will gain, associated benefits, underlying costs and the anticipated return on investment (ROI).
  • Communicating and engaging with employees and users. Thereby enabling SMEs to understand their users’ concerns and help you prioritise the features you genuinely need.  The valuable insight that users provide will allow SMEs to narrow down on solutions which support the core components that employees desire to improve their productivity.
  • Involving and interacting with customers will allow SMEs to identify their pain points and expectations. For example, your customers may be happy with your customer service but are unable to shop from you online. In this case, the priority for the SME should be to open a new online sales channel. Potentially, investing in a customer service chatbot in the future.


Start small and be pragmatic

For SMEs, moving to a more digitally lead strategy can be daunting, and often without a proper structure, it can present several challenges before traction is achieved.

Starting small and building more significant strategies after each success rather than diving straight in blind will allow sufficient time to address and apply mitigation strategies for any challenges. Concentrate your time on improving one area at a time, and delegate tasks to employees or colleagues who have an understanding or enthusiasm to learn of these digital steps.

Learn everything there is to know about each aspect of your business, and how introducing digital solutions can be of benefit. It would be worth noting down any potential blocks you experience.


Adopt new technologies

Understanding new technologies and how they can help transform your business is vital.

New companies may benefit from implementing smaller strategies and simpler software. In contrast, bigger companies that have already dipped their toe in the digital world can invest in pursuing and investigating AI (artificial intelligence) and ML (machine learning).

Determining which elements are most important to your company will depend on the stage it has reached in its digital transformation.


Digital transformation is no longer a plan in the future. In a digital world, digital transformation is an essential requirement for all businesses.

SMEs embracing transformation must consider current operating models, existing processes, and legacy technologies. However, if they are willing to both innovate and experiment, they will manage to outpace competitors who are also adapting.

Small and medium enterprises should not let their business processes and technology stagnate.

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